Practical time travel
Wouldn't it be nice if we could go back in time? We could then go back and put right all the things we did wrong in the past and, Doctor Who style, sort things out so they’ll be better in the future. Marvelous. A couple of extra answers in so-so exams could have made all the difference, avoiding chance encounters we wish had never happened, not turning into the road where the speed cameras were in the first place etc, etc.
But that’s just fanciful thinking and pointless daydreaming. In the long-trousered world we really inhabit we just can’t do these sort of things. We have to make the best of what we’ve done in the past and learn by our mistakes. And, even though Einstein’s theory of relativity seems to indicate that time can run backwards, it’s no use counting on it to get our everyday lives in order. We can’t undo the past.
The Government can, though. I’ve been giving this a lot of thought lately and I think it would be a good idea if the Government had a go at a bit of time travel in the pensions field, where strange things really are possible.
As we all know, our Government has commissioned a number of reports lately to see what can be done about our hopelessly complex pensions system. It’s not ideal and is especially unfortunate as we are living in the most pensioned country in the whole of Europe, we’ve tied ourselves up in so much pensions red tape that we’re beginning to lose the plot. We should have the best pensions system in Europe. We’ve put aside more pension savings in this country than all the other European countries added together. We deserve it.
One of the outcomes Government is hoping for from the reforms it is proposing to implement in the next year or so is that pension products can be simplified to the point where people will be able to buy them ‘off the shelf’. In a supermarket, say, or in a petrol station, that sort of thing. The problem is, and the Government needs to realise it amid all this talk about the necessity for simpler products to be readily available to the public, that one-dimensional answers to the complexity problem are unlikely to help. It is not much use to offer people so-called simple products if their own past pension histories are as complex and diverse as they currently are.
It is each individual case that is now complex due to the chronic obsession for piecemeal fixes that all previous governments have displayed and it is this that needs to be tackled at source if we are to stand any chance of getting things right this time. And this is where I think time travel can help.
Simple products are a nice idea, but are a bit, well, simple when it comes to solving our real problems. Alan Pickering, who ran one of the government’s recent reviews, famously said recently, “A pension is a pension, is a pension.” An excellent quote. And what a great idea. Why should we have so many different types of pension available to us when they all do the same thing? Of course the bureaucrats who run our lives love the current complexity; it gives them something to do, for a start. But it doesn’t really do much for the rest of us, it just makes our lives unnecessarily difficult. What we need is one pension, not hundreds of different, but oh so similar, types as we have now.
One standard type of pension going forward in time from now, though, would not be much help. What is needed is for our convoluted pension histories from the past to be sorted out too. Then, with our pensions pasts in order and our futures simplified we could all put our pensions worries where they belong, at the back of our minds, and get on with the more important things in life. In this respect, time travel is a real possibility. The Government could retrospectively enact legislation to undo the mistakes of the past.
In asking for retrospective legislative changes we need to be careful, however, not to make ourselves worse-off in the process. If the Government start tinkering with the past we will need to keep a very careful eye on things to make sure we’re not short changed in the process. In my opinion, people should not lose out as a consequence of pensions simplification. Indeed, I think there is a world of difference between simplifying pensions, which is the Government’s stated aim, and the dumbing-down of pensions in the name of simplification, which is something we should strongly resist if we are offered it.
Pensions can be changed for the better retrospectively. The Government can change the past. It needs, however, to be achieved with fairness in mind so that no-one loses out. This should be done even if, heaven forbid, some people actually gain extra rights in the process. If the Government could do, they might even succeed in getting people excited about pensions again and we could go on showing the rest of Europe how voluntary pensions saving can become a national asset.
First published in Bloomberg Money, October 2002